During this reporting period the Laboratory of Genetics and Physiology has made progress in the understanding of the genetic networks elicited by cytokines in different cell types. Studies have been performed in several organ systems which are amenable to investigations of the STAT5 signaling pathway through conditional gene deletion. In extension to our work on mammary tissue we investigated the role of the JAK/STAT pathway in hematopoiesis, liver disease and cancer. Liver Previously we had established that cytokine signaling (possibly growth hormone) through the transcription factor STAT5 is essential to protect the liver from hepatosteatosis (fatty liver) and carcinogenesis. We have now performed and published additional studies on the underlying molecular mechanisms. We showed that STAT5 is required for development of hepatocellular carcinoma in a carbon-tetrachloride carcinogenesis model. In particular, we identified a connection between STAT5 and an increase in TGF-beta, which is mediated by a direct interaction between STAT5 and TGF-beta and leads to increased TGF-beta levels. Furthermore, we observed an increase of STAT3 levels in the absence of STAT5 causing increased growth hormone signaling. This indicates that imbalanced cytokine signaling underlies development of liver disease and carcinogenesis Erythropoiesis It was demonstrated that loss of STAT5 in the erythroid lineage results in severe microcytic anemia. It was further shown that STAT5, probably upon stimulation by erythropoietin, activates the transferrin receptor in the red blood cell lineage. This study linked cytokine signaling to transferrin receptor gene expression, which is essential for normal erythropoiesis. Cancer A collaborative study demonstrated for the first time a link between the tumor suppressor phospholipase C-beta3 and STAT5. Stat5 binds to phospholipase C-beta3 and its activity is regulated by SHP-1. Upon loss of the tumor suppressor phospholipase C-beta3, STAT is constitutively active and promotes tumorigenesis. This also provides evidence for a novel mechanism of regulating STAT5 activity that has not been appreciated before.